Today’s post is from guest author Marcus Chrysostomou who runs Equilbrium PR and can be found at http://www.equilibriumpr.co.uk/. Marcus is working with me to promote the first Medway Property Vault which will begin on September 27th… watch this space!
Brexit continues to divide opinion in every conversation, survey and news programme. And this is no different in the world of property. Two recent surveys have brought up opposing views.
A report last week by the National Association of Estate Agents (NAEA) and the Association of Residential Letting Agents (ARLA) compiled with the Centre for Economics and Business Research (Cebr) said that leaving the EU could have long lasting effects on the residential property market. This includes construction where our ability to build homes could be compromised by greater restrictions on workers coming over to the UK.
However, the Royal Institution of Chartered Surveyors (RICS) last week also said that although there may be a short break in price growth, we will then see an above inflation rise to house prices soon after.
Earlier this year Savills, in their 5 year forecast, also said that house prices will rise between 18.2% and 24.5%.
So what can we expect?
You can see from the graph below, that even with the dip between 2006 and 2009, overall, house prices have gone up and are at the highest levels ever.
High prices are great for investors but not buyers and the lack of housing supply has contributed to this rise as well.
Broken down in regions, London, the South East and East have the highest prices. Savills predict that the South West will see some of the highest increases in house prices in the next 5 years.
Nationally, house tenure has clearly changed over the years and recently the number of private renters has increased and home owners decreased (see fig 3)
This is because of house prices, the lack of housing supply and mortgages availability. For investors the rental market is clearly a growing market.
So what does this mean if we leave the EU?
Leaving the EU may well affect the economy, and cause a pause in the property market, but looking at the data, it is sure to pick up again and prices will continue on the upward trend especially in the South East, South West and London. The most recent ONS house price index shows that house prices continue to grow with a 8.2 % year-on-year increase since 2013. The average UK house price is £209,000, which is up £16,000 from last year.
For property investors the rental market is looking like a good option for longer term returns which will remain constant despite any dips in property values. With the lack of housing and high purchase costs, there will also be an increased demand for rental as well.
Ultimately, whatever happens, everyone needs a home to live in and someone has to provide one. This is good news for investors and good news for builders too.